Public Expenditure and Reform Minister Paschal Donohoe has issued a stark warning to his cabinet colleagues that Budget 2017 will not be a giveaway as “protecting the economy” is now a priority writes Elaine Loughlin.
Hopes of a budget splurge have been quashed after Mr Donohoe signalled Brexit and other world events would have “seismic consequences” on Ireland.
It is likely the Government will have to be more cautious in its spending in the upcoming budget to take account of Brexit and other international factors. Any increases to welfare payments or tax cuts could have to be curtailed.
Mr Donohoe yesterday said that stabilising the economy to ensure Ireland is not negatively impacted by global events is now a priority.
“We are now in the early stages of putting together Budget 2017 and I think it’s really important that we are very clear on what the overall goal of this budget is going to be,” said Minister Donohoe.
“This budget is going to have to put together plans and take steps to protect our economy in the context of a world that has now changing very quickly.
“We are all now aware of what is happening with Brexit; we are aware of the seismic consequences that will have for Ireland and for the Irish economy.
“We are seeing further change now taking place within Europe, we are seeing decisions that could be made in America later on in the year having big consequences here in Ireland.
“So all members of government are really clear that we want to put together a budget that protects our economy in the context of risks that are growing and also uses that growing economy to deliver benefit for people after all of the terrible hardship and difficulty that we have gone through in many years.”
His comments came after Fianna Fáil put pressure on the Government to increase the State pension by €5 a week in October’s budget.
“What we are very clear on is that we have an agreement with Fianna Fáil that has particular measures in it. It is not appropriate that their support for this budget becomes conditional on items that are not included in the supply and confidence agreement,” said Mr Donohoe.
“We have an agreement, we will honour it with them, we will honour it over the lifetime of this Dáil and over the lifetime of the agreement that we have, and we will do this in the context of an international environment that has changed radically.”
Mr Donohoe warned it would not be possible for the budget to deliver all the details contained in the confidence and supply agreement with Fianna Fáil. Nor would it be possible to implement everything held in the programme for government in one budget, he said.
“If we were to look to do either, this would create the kind of politics that has created the cost and difficulty that we want to put behind us as a country and we are not going to go down that path.”
Asked whether he thought the budget would be available to implement a number of ambitious plans put forward by Social Protection Minister Leo Varadkar, he hinted that these may not be possible this year.
Mr Varadkar has made it clear that he wants to move to a more European model of social welfare payments which would include linking jobseekers’ payments to inflation or the cost of living and providing the self-employed with more benefits through an overhaul of the PRSI system.
Mr Donohoe said: “Of course I expect all of my cabinet colleagues to be articulating what their ambitions and plans are for a number of years.
“Over a number of budgets we will deliver, but what I would be focusing on now is what can we make happen across 2017 that delivers against the kind of objectives that we have outlined of protecting our economy, protecting the people who depend on that economy, in the context of the kind of change that we are now seeing happening across the world.”
This article first appeared in the Irish Examiner.